Dice Holdings, Inc. Reports Third Quarter 2010 Results

NEW YORK, Nov. 2, 2010 /PRNewswire-FirstCall/ -- Dice Holdings, Inc. (NYSE: DHX), a leading provider of specialized career websites for professional communities, today reported financial results for the quarter ended September 30, 2010.

Third Quarter Operating Results

Revenues for the quarter ended September 30, 2010 totaled $34.4 million, an increase of 29% from $26.7 million in the comparable quarter of 2009.  Strong recruitment activity and the ongoing shift of recruitment spend to specialty career sites are the primary drivers of the revenue increase.  In addition, the acquisitions of Rigzone and WorldwideWorker contributed revenues of $1.5 million in the third quarter of 2010.  Excluding the impact of the two acquisitions, revenues increased 23% year-over-year.  Currency translation from pound sterling to U.S. dollars negatively impacted revenues by $0.5 million from third quarter of 2009.  

Operating income increased 48% to $8.8 million versus $5.9 million in the comparable quarter of 2009.  The increase in operating income was a function of higher revenues partially offset by an increase in operating expenses primarily driven by higher sales compensation.  

Net income for the quarter ended September 30, 2010 doubled to $6.2 million from the $3.0 million earned in the third quarter of 2009.  Net income was favorably impacted by lower income tax expense due to a change in estimates associated with uncertain tax positions related to the outcome of a federal tax exam and due to the expiration of the statute of limitations covering certain tax positions.  Diluted earnings per share were $0.09 for the third quarter of 2010, as compared to diluted earnings per share of $0.05 in the comparable quarter a year ago.  

Net cash provided by operating activities for the quarter ended September 30, 2010 was $12.5 million, an increase of 129% from $5.4 million in the comparable quarter of 2009.

Adjusted EBITDA for the quarter ended September 30, 2010 was $13.9 million, an increase of 16% as compared with $12.0 million for the third quarter of 2009.  See "Notes Regarding the Use of Non-GAAP Financial Measures."

Operating Segment Results

As disclosed on September 30, 2010, the Company's operating segments have been recast.  Tech & Clearance (formerly DCS Online) had no change in the components, which are Dice.com and ClearanceJobs.  The Finance segment now includes eFinancialCareers worldwide operations.  The previous eFinancialCareers segment did not include eFinancialCareers results from North America.  Energy is a new segment composed of WorldwideWorker and Rigzone.  The Other segment contains AllHealthcareJobs and Targeted Job Fairs.  Previous Other segment components WorldwideWorker and eFinancialCareeers North America have moved as previously noted. Through June 30, 2010, Other also included JobsintheMoney.  All comparative periods have been recast to reflect the changes in reporting segments.

For the quarter ended September 30, 2010, Tech & Clearance segment revenues increased 18% year-over-year to $23.0 million or 67% of Dice Holdings' consolidated revenues.  Growth was driven by a greater number of recruitment package customers served at Dice.com, as well as a 28% increase in revenues at ClearanceJobs.

The Finance segment accounted for 27% of Dice Holdings' consolidated revenues in the third quarter of 2010.  For the quarter ended September 30, 2010, eFinancialCareers revenues increased 37% to $9.1 million. Currency translation from pound sterling to U.S. dollars negatively impacted revenues by $0.5 million from the third quarter 2009.  Excluding the currency impact, Finance segment revenues grew 43% from the comparable quarter a year ago.

The Energy segment contributed $1.5 million in revenues in the quarter ended September 30, 2010.  This segment consists of Rigzone (since the date of acquisition August 11, 2010) and WorldwideWorker (since the date of acquisition, May 6, 2010).

The remaining businesses operated by Dice Holdings include AllHealthcareJobs (since the date of acquisition, June 10, 2009) and Targeted Job Fairs and are reported in the Other category.  Other revenues increased 18% to $0.7 million for the quarter ended September 30, 2010 from the comparable 2009 period which included a $0.1 million contribution from JobsintheMoney which has since been shut down.

Nine Months Operating Results

Revenues for the nine months ended September 30, 2010 totaled $91.1 million, as compared to $83.3 million in the same period in 2009, an increase of 9%.  Strong results at eFinancialCareers and continued improvements in recruitment activity at Dice are the primary drivers of the increase.    Currency translation from pound sterling to U.S. dollars had a minimal negative impact on revenues for the nine month period, as compared to the same period a year ago.

By segment, Tech & Clearance revenues increased 3% to $63.4 million for the nine month period ended September 30, 2010.  In the same period, Finance revenues grew 21% year-over-year to $24.1 million.  Energy contributed revenues of $1.7 million since the acquisitions of WorldwideWorker and Rigzone.  Other revenues increased 5% to $1.9 million.

Net income for the nine months ended September 30, 2010 increased 37% to $13.2 million, as compared to $9.6 million in the nine months ended September 30, 2009.  

For the nine month period ended September 30, 2010, net cash provided by operating activities more than doubled to $34.7 million, as compared with $16.4 million for the same period last year. Adjusted EBITDA for the nine months ended September 30, 2010 was $35.1 million, compared with $38.2 million for the same period in 2009. See "Notes Regarding the Use of Non-GAAP Financial Measures."

Balance Sheet

Deferred revenue at September 30, 2010 was $44.7 million compared to $41.1 million at June 30, 2010 and $31.6 million at September 30, 2009.  The $3.6 million or 9% sequential increase in deferred revenue is primarily attributed to strong renewal rates on annual contracts and a sequential increase in new business at Dice.com, as well as the contribution from Rigzone.

Net Debt, defined as total debt less cash and cash equivalents and marketable securities, was $14.8 million at September 30, 2010, consisting of total debt of $57.0 million minus cash and cash equivalents and marketable securities of $42.2 million. This compares to a Net Cash balance of $10.7 million at June 30, 2010, consisting of cash and cash equivalents and marketable securities of $40.4 million minus total debt of $29.7 million.  The increase in total debt outstanding was due to borrowings of $36.0 million in conjunction with the Rigzone acquisition (August 11, 2010), which has been partially offset by payments of $9.0 million through September 30, 2010.  

On July 29, 2010, the Company entered into a new Credit Agreement which provides for a revolving facility of $70 million and a term facility of $20 million, with each facility maturing on January 31, 2014.   Borrowings under the Credit Agreement bear interest at the Company's option, at a LIBOR rate, Eurocurrency rate, or base rate plus a margin. The margin ranges from 2.75% to 3.50% on LIBOR and Eurocurrency loans and 1.75% to 2.50% on base rate loans, determined by the Company's most recent consolidated leverage ratio. Quarterly payments of $1 million of principal are required on the term loan facility, commencing December 31, 2010.

Management Comments

Scot Melland, Chairman, President and Chief Executive Officer, said, "The third quarter performance included our best sales growth of any quarter this year illustrating how strongly we are performing in this sideways employment market.  At Dice, we had double-digit year-over-year customer growth and eFinancialCareers posted excellent results in each of our major markets.  This performance clearly reflects the benefits of our specialized approach which allows customers to find and recruit highly-skilled talent more efficiently and effectively."   Mr. Melland added, "We are well positioned to capitalize on what we anticipate to be a continued, gradual employment recovery with focused investments into our existing communities and geographic expansion."

Michael Durney, Senior Vice President, Finance and Chief Financial Officer, said, "The positive momentum in our business continues - highlighted by the fourth consecutive increase in deferred revenue, as well as robust and consistent operating cash flow at $12.5 million this quarter - the highest of the year. The bottom line is that our business model delivers for shareholders with strong levels of profitability and significant free cash flow.  But, it all starts with the value that customers receive and we are very excited to provide that same value in the energy sector."  Mr. Durney noted, "We made our initial investment into energy recruitment with WorldwideWorker and have significantly enhanced our position with Rigzone.  The breadth of geographic markets that we serve in energy, along with expansion opportunities, creates a great new vertical for the company."

Business Outlook

The Company is providing a current, point-in-time view of estimated financial performance based on what it sees as of November 2, 2010 for both the quarter and the year ending December 31, 2010.  The Company's actual performance will vary based on a number of factors including those that are outlined in our Annual Report on Form 10-K for the year ended December 31, 2009, in the sections entitled "Risk Factors," "Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our quarterly reports on Form 10-Q.

Conference Call Information

The Company will host a conference call to discuss third quarter 2010 results today at 8:30 a.m. Eastern Time.  Hosting the call will be Scot W. Melland, Chairman, President and Chief Executive Officer, and Michael P. Durney, Senior Vice President, Finance and Chief Financial Officer.

The conference call can be accessed live over the phone by dialing 800-573-4840 or for international callers by dialing 617-224-4326; the participant passcode is 45096639.  A replay will be available two hours after the call and can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers; the replay passcode is 35380815. The replay will be available until November 9, 2010.

The call will also be webcast live from the Company's website at www.diceholdingsinc.com under the Investor Relations section.

About Dice Holdings, Inc.

Dice Holdings, Inc. (NYSE: DHX) is a leading provider of specialized career websites for professional communities, including technology and engineering, financial services, energy, healthcare, and security clearance. Our mission is to help our customers source and hire the most qualified professionals in select and highly skilled occupations, and to help those professionals find the best job opportunities in their respective fields and further their careers. For more than 20 years, we have built our company by providing our customers with quick and easy access to high-quality, unique professional communities and offering those communities access to highly relevant career opportunities and information. Today, we serve multiple markets primarily in North America, Europe, the Middle East, Asia and Australia.

Notes Regarding the Use of Non-GAAP Financial Measures

Dice Holdings, Inc. (the "Company") has provided certain non-GAAP financial information as additional information for its operating results.  These measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States ("GAAP") and may be different from non-GAAP measures reported by other companies.  The Company believes that its presentation of non-GAAP measures, such as adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock based compensation expense, and other non-recurring income or expense ("Adjusted EBITDA"), free cash flow, net cash and net debt, provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations.  In addition, the Company's management uses these measures for reviewing the financial results of the Company and for budgeting and planning purposes.

Adjusted EBITDA

Adjusted EBITDA is a metric used by management to measure operating performance.  Management uses Adjusted EBITDA as a performance measure for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors.  The Company also uses this measure to calculate amounts of performance based compensation under the senior management incentive bonus program.  Adjusted EBITDA, as defined in our Credit Agreement, represents net income (loss) plus (to the extent deducted in calculating such net income (loss)) interest expense, income tax expense, depreciation and amortization, non-cash stock option expenses, losses resulting from certain dispositions outside the ordinary course of business, certain writeoffs in connection with indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering, extraordinary or non-recurring non-cash expenses or losses, transaction costs in connection with the Credit Agreement up to $250,000, deferred revenues written off in connection with acquisition purchase accounting adjustments, writeoff of non-cash stock compensation expense, and business interruption insurance proceeds, minus (to the extent included in calculating such net income (loss)) non-cash income or gains, interest income, and any income or gain resulting from certain dispositions outside the ordinary course of business.  

We consider Adjusted EBITDA, as defined above, to be an important indicator to investors because it provides information related to our ability to provide cash flows to meet future debt service, capital expenditures and working capital requirements and to fund future growth as well as to monitor compliance with financial covenants.  We present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides our board of directors, management and investors with additional information to measure our performance, provide comparisons from period to period and company to company by excluding potential differences caused by variations in capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and to estimate our value.  

We present Adjusted EBITDA because covenants in our Credit Agreement contain ratios based on this measure.  Our Credit Agreement is material to us because it is one of our primary sources of liquidity.  If our Adjusted EBITDA were to decline below certain levels, covenants in our Credit Agreement that are based on Adjusted EBITDA may be violated and could cause a default and acceleration of payment obligations under our Credit Agreement.

Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our profitability or liquidity.

Free Cash Flow

We define free cash flow as net cash provided by operating activities minus capital expenditures. We believe free cash flow is an important non-GAAP measure as it provides useful cash flow information regarding our ability to service, incur or pay down indebtedness or repurchase our common stock.  We use free cash flow as a measure to reflect cash available to service our debt as well as to fund our expenditures.  A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period since it excludes cash used for capital expenditures during the period.

Net Cash/Net Debt

Net Cash is defined as cash and cash equivalents and marketable securities less total debt. Net Debt is defined as total debt less cash and cash equivalents and marketable securities. We consider Net Cash and Net Debt to be important measures of liquidity and indicators of our ability to meet ongoing obligations.  We also use Net Cash and Net Debt, among other measures, in evaluating our choices for capital deployment.  Net Cash and Net Debt presented herein are non-GAAP measures and may not be comparable to similarly titled measures used by other companies.

Forward-Looking Statements

This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions, including without limitation statements under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."  These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.  These factors include, but are not limited to, competition from existing and future competitors in the highly competitive developing market in which we operate, failure to adapt our business model to keep pace with rapid changes in the recruiting and career services business, failure to maintain and develop our reputation and brand recognition, failure to increase or maintain the number of customers who purchase recruitment packages, cyclicality or downturns in the economy or industries we serve, the failure to attract qualified professionals to our websites or grow the number of qualified professionals who use our websites, the failure to successfully identify or integrate acquisitions, U.S. and foreign government regulation of the Internet and taxation, our ability to borrow funds under our revolving credit facility or refinance our indebtedness and restrictions on our current and future operations under our credit facility.  These factors and others are discussed in more detail in the Company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, under the headings "Risk Factors," "Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our quarterly reports on Form 10-Q, all of which are available on the Investor Relations page of our website at www.diceholdingsinc.com.

You should keep in mind that any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which we make it. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

Supplemental Information and Non-GAAP Reconciliations

On the pages that follow, the Company has provided certain supplemental information that we believe will assist the reader in assessing our business operations and performance, including certain non-GAAP financial information and required reconciliations to the most comparable GAAP measure.  A quarterly balance sheet, statement of operations and statement of cash flows for the quarter and nine months ended September 30, 2010 are provided elsewhere in this press release.  Supplemental schedules provided include:

Quarterly Adjusted EBITDA Reconciliation

A reconciliation of Adjusted EBITDA for the quarters and nine months ended September 30, 2010 and 2009 is provided.  This information provides the reader with the information we believe is necessary to analyze the Company.

Non-GAAP and Quarterly Supplemental Data

On this schedule, the Company provides certain non-GAAP information as of and for the quarters and nine months ended September 30, 2010 and 2009 that we believe is useful to understanding the business operations of the Company.

SOURCE Dice Holdings, Inc.